Financials- Kodi’s Food For All Store
Please build off of the four papers attached for the Kodi’s Food For All Store.
Financials
For this area of the Business Plan I would like to know that you understand what it will take to start the business.
While I don’t make this harder than I am asking, I do want you to do some research and really delve into what it takes to start and run a business. This means including all elements/purchases/expenditures that a business makes for their daily operations.
Your final submittal will include each of the following with a comprehensive analysis of each:
1) A breakdown of necessary costs for your business
2) Your fixed cost (percentage),
3) The amount of profit desired,
4) The amount of sales necessary to generate profit desired.
What I would like to see for the breakdown of costs to start the business is the list of items and an estimated cost per item.
Example:
Location (rent) $500 per month
Advertising $300 per month
Start up Inventory $5,000 (one month supply)
(this could be multiple items)
First month salary $4,000
First month payroll $1,600 ($8.00 an hour times number of hours)
Etc . . .
Fixed cost percentage: 100% of total cost minus the percentage of variable costs equals the percentage of fixed costs.
Breakeven: Take your fixed costs dollars and divide that by your fixed costs percentage to determine your break-even.
ANSWER
Financial Plan
The starting fund for Kodi’s Food Store for All will be financed by owner investment. The food store sales are expected to increase at 4% in the first quarter due to the promotional programs as well as product line expansions. Kodi’s Food Store for All will continue supporting and promoting growth of the business through innovation and product line expansion to facilitate its success. Kodi’s Food Store for All sales will be based on the industry standard.
The table below indicates the startup expenses at Kodi’s Food Sore for All during the first sales year.
| Startup Expenses | |
| Working Capital | $ 100,000 |
| Legal | $ 1,500 |
| Insurance | $ 3,000 |
| First Month Payroll | $ 80,000 |
| Marketing | $ 6,000 |
| Books/Accounting | $ 1,000 |
| Rent (per month) | $ 20,000 |
| Utilities | $ 10,000 |
| Equipment/supplies | $ 5,000 |
| Equipment/building maintenance | $ 1,500 |
| Delivery/Transportation | $ 5,000 |
| Total Operating expenses | 233,000 |
Projected Profit and Loss
The table and charts below indicate the projected profit and loss. Kodi’s Food Store for All is expected to be profitable from the initial year with the net return increasing over the subsequent three years. Within the first two months, Kodi’s Food Store for All is expected to operate in losses. However, the business should begin to make profits from the third month.
| Projected Profit and Loss | 1St Year | 2nd Year | 3rd Year |
| Sales | $ 370,000 | $ 410,500 | $ 450,500 |
| Direct Cost of Sales | $ 130,500 | $ 150,500 | $ 175,500 |
| Production Expenses | $ 0 | $ 0 | $ 0 |
| Total Cost of Sales | $ 130,500 | $ 150,500 | $ 175,500 |
| Gross Margin | $ 239,500 | $ 260,000 | $ 275,000 |
| Expenses | |||
| Legal | $ 1,500 | $ 1,500 | $ 1,500 |
| Insurance | $ 3,000 | $ 3,000 | $ 3,000 |
| First Month Payroll | $ 80,000 | $ 80,000 | $ 80,000 |
| Marketing | $ 5,000 | $ 10,000 | $ 20,000 |
| Books/Accounting | $ 1,000 | $ 1,000 | $ 1,000 |
| Rent (per month) | $ 20,000 | $ 20,000 | $ 20,000 |
| Utilities | $ 10,000 | $ 10,000 | $ 10,000 |
| Equipment/supplies | $ 5,000 | $ 5,000 | $ 5,000 |
| Equipment/building maintenance | $ 1,500 | $ 1,500 | $ 1,500 |
| Delivery/Transportation | $ 5,000 | $ 5,000 | $ 5,000 |
| Pay Roll Taxes | $ 25,000 | $ 25,000 | $ 25,000 |
| Total Operating Expenses | $ 157,000 | $ 162,000 | $ 172,000 |
| Profit Before Interest and Taxes | $ 82,500 | $ 98,000 | $ 103,000 |
| EBITDA | $ 26,000 | $ 28,000 | $ 30,000 |
| Interest expense | $ 4,000 | $ 5,500 | $ 6,500 |
| Taxes Incurred | $ 5,300 | $5, 450 | $ 5, 750 |
| Net Profit | $ 47,200 | $ 59, 050 | $ 60,750 |
Break Even Analysis
The approximated monthly revenue break-even point involves rent, payroll, cost of goods, utilities among other operating expenses. Kodi’s Food Store for All expects that the summer sales will cover the slow winter sales. The business will flexibly adjust the monthly expenses to maintain a positive cash flow. The fixed cost percentage for Kodi’s Food Store for all is 70%. This has been obtained from 100% of total cost minus 30% of variable costs. The fixed cost for Kodi’s Food Store for All is $ 20,375. Therefore, the monthly revenue break even for Kodi’s Food Store for All will be $ 20,375/70%= $ 29, 107.
| Break Even Analysis | |
| Monthly fixed cost | $ 20, 375 |
| Estimated fixed cost percentage | 70% |
| Monthly Revenue Break-even | $29, 107 |
